Europe Summary and Highlights 16 Jun

European morning session

A flat, sidelined morning, as the market continues its ‘post deal exhaustion’ – and more importantly waits on the information-dense FOMC before committing on any fresh dollar direction.

Overnight saw a little bit of light backfilling on Monday’s moves, but that has levelled out, leaving zero net moves across the board and with the likes of EUR/USD back to sitting on 1.16~ waiting level for instance. 

Without any unexpected headlines, the market looks like it will be in hibernation mode until the Fed unfolds as this is key now.

Light on the calendar front too this morning. ZEW economic sentiment 10.5 from -10.2, showing some pick up hopes for a deal, while the current conditions slipped to -81 from -77.8 - the results showing how much improvement is dependent on the geopolitical expectations.

Asia Session

As per forecast, the BoJ has hiked rates by 25bps to 1% with a 7-1 vote. Bond purchase tapering will stop from April 2027, at 2 trillion JPY per month while the existing trajectory of 200 billion cut per quarter persists. The BoJ will no longer conduct interim assessment on bond purchase but will always be ready for yield spikes.  It looks like a well balanced move from the BoJ to cope politically. USD/JPY is trading 0.06% lower at 160.23.

The RBA has kept rates unchanged at 4.35%. It is what the RBA has told us in the previous meeting and seems they have not changed their mind. While they see inflation to be still high, there is no rush in their language to hike further, especially when oil price is moderating. AUD/USD is trading 0.25% lower at 0.7053. NZD/USD is trading 0.28% lower while USD/CAD rises 0.15% as oil treads lower. Major equity indexes are consolidating recent gains. Else, EUR/USD and GBP/USD are down 0.1%.